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How do courts determine child support amounts?

| Feb 17, 2021 | Divorce |

While you know you must pay your ex-spouse child support after your divorce, you do not know how much. How should you adjust your budget to meet your financial obligations?

Forbes explores how judges and courts decide how much divorced parents pay for child support. Get an idea of the factors that matter the most.

Earned income

What streams of income do you have? For child support, courts often consider carried interest, salary, deferred compensation, partnership distributions and employment perks. Your signing/performance bonus or employer retirement account contributions may also determine how much you owe each month.

Taxes

Expect the court to review your most-current federal income taxes when deciding your child support amount. Further, a judge may look into earnings that you did not report on your taxes. If your lifestyle does not match the income you report on your taxes, a court may dive deeper to see how you afford a second house, an expensive car and private tutoring for your child with your reported income.

Potential earnings

Besides what you currently earn, a judge may look into what you could earn. This often applies to those who received a degree from a prestigious program or institution or once had a lucrative occupation but now work a lower-paying job. Rather than calculating your support payments with your current earnings, the court may instead use your former salary. Does your family send you a sizable monthly allowance or financial contribution? If so, a judge may impute that “income” for child support.

Every aspect of your finances may become fair game for child support. The right knowledge helps you prepare to meet your new financial responsibilities.